Bank of Tokyo-Mitsubishi and a Chinese bank are to co-finance the first yuan loan for a Sino-foreign joint venture in China. The Japanese bank and the Pudong branch of the Industrial and Commercial Bank of China (ICBC), yesterday signed an agreement to provide 30 million yuan (about HK$27.87 million) as working capital for home appliances manufacturer Shanghai Sharp Electrical Equipment Co. Of the loan, 20 million yuan will come from ICBC Pudong and 10 million from Tokyo-Mitsubishi. The interest rate for the one-year loan is about 11 per cent, based on the central bank's set rate of 10.08 per cent and a 10 per cent limit either way. Tokyo-Mitsubishi is one of nine foreign banks licensed to carry out yuan transactions, including loans to and deposits from foreign funded-enterprises and foreigners in Shanghai. The banks are banned from the most profitable segment - taking deposits from and making loans to domestic companies and mainlanders - forcing them to rely mainly on internal reserves for their yuan supply. Analysts said yesterday's co-financing arrangement was a way of working around the bank's yuan shortage. Tokyo-Mitsubishi's Shanghai general manager Hideki Ariga said: 'This is the first time a joint venture has taken a co-financing loan from a foreign bank and a domestic bank. 'This arrangement could serve as an ideal model of co-operation for Shanghai banks and foreign banks in promoting Pudong's development.' Banks allowed to do yuan business must relocate to Pudong, the former farmland east of the Huangpu River which is being transformed into an economic and financial centre. ICBC Pudong president Ji Xiaohui said he welcomed the foray of foreign banks into yuan business, saying it would offer opportunities for co-operation, such as the co-financing loan.